Panama’s government sees no “prospect of increasing” minimum wage

RIO DE JANEIRO, BRAZIL – Panama’s Minister of Labor and Workforce Development (MITRADEL) Doris Zapata Tuesday said that there is no favorable “outlook” for increasing the minimum wage in the country, a matter discussed every 2 years at a tripartite table to be held in 2021.

“Without obviating our legal and constitutional responsibility, I believe that the economic situation at this time (in the midst of the Covid-19 pandemic) does not present the prospect of an increase in the minimum wage,” Zapata said.

The Minister explained that this salary increase “would need to be considered” and recalled that any potential adjustment is reviewed at a tripartite table “based on economic activities, and these have been impacted” by the Covid-19 pandemic, which led to a 17.9% plunge in the Gross Domestic Product (GDP) in 2020.

Unemployment more than doubled last year to 18.5% – the highest rate in 20 years – while informality exceeded 52% due to the ongoing pandemic, according to official data, although local analysts place unemployment currently at around 20%.

Some local economists argue that a wage increase would boost domestic consumption and therefore Panama’s economy, expected to grow between 8% and 12% by 2021, according to international organizations’ projections.

Zapata declared that she has invited employers and unions to a meeting next October to discuss the feasibility or otherwise of “formally” setting up the so-called tripartite table to discuss a potential wage adjustment.

Although employers and unions debate the wage adjustment at the tripartite table with the Executive’s mediation, it is the latter that ultimately decides on the matter given that the parties fail to reach an agreement.

This was the case in December 2019, when the current government of President Laurentino Cortizo decreed an average increase of 3.3% in the minimum wage, and also in 2017, when the then President Juan Carlos Varela approved a 6.5% increase in large and 4.5% in small companies.